Investment Rating - The report maintains a "Recommendation" rating for the animal health industry, expecting the industry index to outperform the benchmark index by more than 5% in the next 3-6 months [2][82]. Core Insights - The animal health industry has shown significant growth in vaccine issuance, with most vaccine varieties experiencing year-on-year increases in the first three quarters of the year. Key vaccines such as porcine epidemic diarrhea, porcine circovirus, and others have demonstrated strong performance [9][12]. - The Veterinary Product Index (VPI) has shown a continued upward trend in October, indicating a recovery in raw material prices for veterinary drugs after a period of decline [3][58]. - The report highlights that the industry is gradually emerging from a low point, with a focus on undervalued companies that exhibit both elasticity and certainty in their performance [71][72]. Summary by Sections Vaccine Issuance - Cumulative data from January to September shows that most vaccine varieties have experienced significant year-on-year growth, particularly in porcine vaccines, with increases of 9.1% for foot-and-mouth disease vaccine, 29.5% for porcine circovirus vaccine, and 60.2% for brucellosis vaccine [9][12]. - The report notes that the growth in vaccine issuance is driven by multiple factors, including farming profitability, increased slaughter rates, and the introduction of new products [13][14]. Raw Material Prices - As of October 22, the VPI stands at 69.29, reflecting a 0.1% increase from the end of September and a 6.4% increase year-on-year. This marks a recovery after three consecutive months of decline [58][61]. - The report indicates that the prices of most veterinary raw materials have improved, with significant increases noted for products like Tylosin and Amoxicillin [59][61]. Investment Recommendations - The report suggests focusing on companies that have shown resilience and innovation, such as Reap Bio, Kexin Bio, and others, as they are expected to perform well in the recovering market [71][73]. - It emphasizes that the competitive landscape is shifting, with larger companies likely to outperform smaller ones, leading to potential consolidation in the industry [72][73].